Financial transparency and profit limitation in children's residential care: consultation analysis

5 Financial transparency information (Q7–Q11)

5.1 The consultation paper explained that the Scottish Government proposed using a standard form to collect information from care providers on an annual basis, with the information collected building on that already sought by the Care Inspectorate and Scotland Excel (SXL).

5.2 The consultation paper contained five questions on the format of the proposed financial transparency request, the nature and level of information to be collected, and the use that might be made of the information.

Question 7: In order to cause the least impact to businesses, what format do you believe the financial transparency request should take? e.g. audited annual accounts or a more detailed version of the information captured in forms such as those provided to Scotland Excel or the Care Inspectorate.

Question 8: What explanatory information would you want to provide alongside the financial information collected to demonstrate the ways in which the finances are structured? (e.g. additional funds being saved to open a new home).

Question 9: Do you agree that the information should be provided at individual service level, provider level and at parent / associated company level? [Yes / No] Please explain your answer.

Question 10: Is there any additional information that the Scottish Government should be collecting that is not included in the proposal above? Please explain your answer.

Question 11: Would it be useful to use the financial information collected to watch for potential market failure? [Yes / No] Can you give reasons for this?

Format of financial transparency requests (Q7)

5.3 Question 7 asked respondents about the format the financial transparency request should take to have the least adverse impact on businesses. This was an open question and altogether 25 respondents (18 organisations and 7 individuals) made comments.

5.4 Respondents offered a wide range of views in response to this question and there was no consensus or dominant view within each of the organisational groups. Different respondents suggested the financial information should be provided as:

• Audited annual accounts – also referred to as ‘statutory accounts’
• Existing OSCR returns (for charities only)
• A more detailed version of existing Scotland Excel (SXL) forms
• A (new) standardised template to collect data on accounts and quality standards.

5.5 Some respondents offered their suggestions with caveats. For example:

• In relation to audited annual accounts, there were suggestions that:
  • These should be provided by ‘larger providers’ only, while ‘smaller providers’ could provide a more detailed version of existing SXL / Care Inspectorate forms.
• The accounts should show staff wages, how the money has been spent on young people, service improvements, and any surplus. They should include a trustee report to explain how any surplus will be used.
• In relation to OSCR returns, there was a view that these would be sufficient to achieve transparency among charities, and it was suggested that all residential establishments could be required to register as charities.
• In relation to the creation of a new standardised template, it was suggested this should ensure that all costs are disaggregated in a standard way that allows comparisons at individual service level. The development of a new form for this purpose would allow categories of expenditure to be included that may not exist within annual accounts.

5.6 Some respondents made more general suggestions. For example, it was suggested that whatever format is used:

• There should be enough detail to make the exercise meaningful.
• The information should be provided in a way that is understandable to members of the public.
• Steps should be taken to minimise additional work for care providers. There was a specific suggestion that a single IT system should be used so that care providers only have to provide information once in a single format – with no requirement to send separate reports to OSCR, local authorities, SXL, Scottish Government, etc.

5.7 One organisational respondent challenged the premise of this question, arguing that the aim of this policy should not be to ‘cause the least impact on business’, but rather to ensure the best outcomes for children.